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Transcript of Dodge 2013 Construction Outlook Robert Murray Vice President, Economic Affairs McGraw-Hill...
Dodge 2013Construction OutlookRobert MurrayVice President, Economic Affairs
McGraw-Hill Construction
2
Robert Murray is vice president, economic affairs for McGraw-Hill Construction, a division of The McGraw-Hill Companies.
Bob has been with McGraw-Hill since 1980, and he is the author of the widely circulated McGraw-Hill Construction Outlook. He coordinates the company’s five year forecast product, the Construction Market Forecasting Service, which offers detailed projections of construction activity for the U.S and nine major regions. He is frequently quoted by such major newspapers as the Wall Street Journal on industry developments, and his comments have appeared in Business Week, Engineering News-Record, CNN, and other media outlets. In addition, Bob serves as anchorman for McGraw-Hill's prestigious Construction Industry Outlook Conference, held in Washington each October. He also conducts a series of construction outlook seminars each spring and fall in various cities across the U.S. and Canada.
Bob received his bachelor's degree from Princeton University, and he holds both an M.B.A. and a master's degree in economics from Columbia University.
2
Major Questions Facing Construction
3
• What are the prospects for the U.S. Economy – Will it be able to avoid the “fiscal cliff” and recession?
• Will the degree of uncertainty ease in 2013?
• What impact will the outcome of the 2012 Presidential Election have on construction?
• Will financing for commercial building show improvement?
• What funding limitations are being faced by public construction?
• What’s the impact on major construction sectors?
3
-40%
-30%
-20%
-10%
0%
10%
20%
30%
08 09 10 11 12 13 08 09 10 11 12 13 08 09 10 11 12 13 08 09 10 11 12 13
U.S. Construction Market Outlook --Percent Change, 2008-2013, for Total Construction and Major Sectors
4
History Forecast
$152 Billion$148 Billion$158 Billion$458 BillionTotal Const. Residential Nonresidential Nonbuilding
2012 Value
4
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
08 09 10 11 12 13 08 09 10 11 12 13 08 09 10 11 12 13
U.S. Construction Market Outlook --Nonresidential Bldg. Dollars – down 10% in 2012, up 5% in 2013
5
History Forecast
2012 Value
Total Nonresidential Commercial Institutional
$86 Billion$50 Billion$148 Billion*
*Includes Manufacturingat $12 Billion for 2012
0%
5
U.S. Construction Market Outlook --Nonresidential Bldg. Sq. Ft. – up 1% in 2012, up 6% in 2013
6
0%
2012 Sq. Ft.276 MSF376 MSF703 MSF*
Total Nonresidential Commercial Institutional
*Includes Manufacturing at 52 MSF for 2013
History Forecast
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
08 09 10 11 12 13 08 09 10 11 12 13 08 09 10 11 12 13
6
U.S. Construction Market Outlook --The Dodge Momentum Index offers insight on what’s ahead.
7
Dodge Momentum Index Index: 2002 = 100
50
75
100
125
150
175
200
02 03 04 05 06 07 08 09 10 11 12 13
The Dodge Momentum Index (DMI) tracksthe first (or initial) reports for nonresidential buildingprojects at the planning stage.
Some recent points:
• The DMI bottomed out in July 2011, and has been trending upward tenuously since then.
• Recent hesitation in DMI indicates that early
stage of recovery will be subject to pauses.
• The DMI has picked up some of the timing shown by commercial and institutional starts.
Recent increases in DMI for institutional component suggests that decline for this sector may be near an end.
DMI Components Index: 2002 = 100
50
75
100
125
150
175
200
225
02 03 04 05 06 07 08 09 10 11 12 13
Institutional
Commercial
7
Agenda
8
• The Environment -- Macroeconomic Picture
• Single Family Housing and Multifamily Housing• Commercial Buildings• Institutional Buildings, plus Manufacturing Bldgs.• Public Works and Electric Utilities• Total Construction, including risks to the forecast
8
GDP Pattern:
History Forecast 2009 2010 2011 2012 2013
-3.1% +2.4% +1.8% +2.1% +2.2%
Shape of Recovery:• Subdued – Periods of moderate expansion have been followed by deceleration.
• Much of 2012 has been adversely affected by Continued uncertainty, due to European debt crisis November 2012 elections Fiscal Cliff
• One plus – corporate profits healthy but are they now slipping?
U.S. Macroeconomic Outlook After strong finish to 2011 (up 4.1%), GDP has weakened so far in 2012.
Real GDP Growth - Quarterly Annualized Percent Change
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
05 06 07 08 09 10 11 12 13
'12 Q3 +2.0%
9
• Jobs lost from Feb.’08 to Feb. ’10: 8.8 Million.• Job creation so far in 2010-2012:
4.5 Million. Unemployment rate at 7.9%
• Job growth in May-Aug. ’11: 80,000 /mo
in Sept.-Dec.’11: 174,000 /mo
in Jan.-Mar. ’12 : 226,000 /mo in Apr.-June ’12: 67,000 /mo
in July-Oct. ‘12: 173,000 /mo
U.S. Macroeconomic Outlook After weakening in 2012 Q2, employment growth strengthened in July-Oct. period.
Change in Total Employment Thousands of Workers
-900
-750
-600
-450
-300
-150
0
150
300
450
600
05 06 07 08 09 10 11 12 13
Oct. '12 +171,000
2012 By Month
143
45
192
68
171148
259275
87
181
0
50
100
150
200
250
300
Jan Feb Mar Apr May Jun Jul Aug Sept Oct
Unemployment Rate Percent
3
4
5
6
7
8
9
10
11
01 02 03 04 05 06 07 08 09 10 11 12 13
Oct. '12 7.9%
10
• Inflation has settled back during 2012, reflecting decreased demand for commodities as the result of the global economic slowdown.
U.S. Macroeconomic Outlook Inflation overall remains subdued, despite volatile oil and gas prices.
Consumer Price Index Percent Change, Year-over-Year
-3
-2
-1
0
1
2
3
4
5
6
01 02 03 04 05 06 07 08 09 10 11 12 13
Price of Oil Dollars Per Barrel, West Texas Intermediate
0
25
50
75
100
125
150
01 02 03 04 05 06 07 08 09 10 11 12 13
CPI
Core CPI
• The price of energy remains volatile, affected by instability in the Middle East and refinery shutdowns in California.
Some easing of gas prices could cushion negative impact of tax hikes in early 2013.
11
• Since Dec. 2008, the federal funds rate target set at 0% to .25%.
• Federal Reserve expects “exceptionally low levels for the federal funds rate at least through mid-2015.”
U.S. Macroeconomic Outlook Short and long term rates very low; expected to stay low through 2015.
Monetary Policy
0
1
2
3
4
5
6
7
01 02 03 04 05 06 07 08 09 10 11 12 13
Federal Funds Rate, Percent10-Year Treasury Bill
1
2
3
4
5
6
7
01 02 03 04 05 06 07 08 09 10 11 12 13
Percent
• At its September 2012 policy meeting, the Fed announced that it will buy large quantities of mortgage bonds ($40 billion per month), to “generate new jobs.”
• Latest round of “quantitative easing” through the purchase of securities. Emphasis this time on job creation and housing market.
12
U.S. Macroeconomic Outlook Lending standards for commercial real estate loans are easing.
• Lending standards for commercial real estate loans have eased for 7 straight qtrs.
• Lending standards for C&I loans have eased for 11 out of 12 quarters.
• But, lending standards for residential mortgage loans have shown little or no easing.
• Oct. 30, 2009 – Federal bank regulators issued guidelines on commercial real estate loans, encouraging banks to rework loans.
• A few major projects have resumed construction
• Uncertainty surrounding European debt crisis has made banks more cautious once again.• Impact of financial regulatory reform?
• Mortgage Bankers Survey results
Survey of Bank Lending Officers Percent Reporting Tighter Lending Standards for Commercial Real Estate Loans
-40
-20
0
20
40
60
80
100
90 92 94 96 98 00 02 04 06 08 10 12
Survey of Bank Lending Officers Percent Reporting Stronger Demand for Commercial Real Estate Loans
-80
-60
-40
-20
0
20
40
60
90 92 94 96 98 00 02 04 06 08 10 12
13
Fiscal 2012 Appropriations
• Federal highway program trimmed 5% to $39 bil.
High-speed rail received zero funding again Mass transit account increased 5%
• Other accounts generally lower: Clean Water SRF’s cut 4% Drinking Water SRF’s cut 5%
GSA new construction account cut 39% GSA repairs &renovation account unchanged
DOD base closure account cut 77% DOD other military construction cut 8% VA major construction projects cut 45%
Corps of Engineers construction increased 5%
Fiscal 2013 Appropriations
• A continuing resolution passed in September, keeping funding near current levels through March 2013. (Has 0.6% hike for domestic discretionary programs.)
U.S. Macroeconomic Outlook Funding from federal government constrained; fiscal cliff looms.
Federal Budget Surplus/Deficit Billions of Dollars, CBO Projections
-1,600
-1,400
-1,200
-1,000
-800
-600
-400
-200
0
200
400
90 92 94 96 98 00 02 04 06 08 10 12
14
U.S. Macroeconomic Outlook Other federal funding issues.
• Passage of MAP-21 (Moving Ahead for Progess in the 21st Century)
- Provides roughly $105 billion over two years, including $80 billion for highways, $21 billion for transit, and $3 billion for highway safety programs.
- Funding still determined by annual appropriations process
- Finds ways to stretch funding – increases TIFIA loan program, loosens some restrictions on tolling for new interstates, HOV lanes.• Impending Fiscal Cliff
- Uncertainty as to extent Bush-era tax cuts will be extended, also degree to which automatic spending cuts will be implemented.
- CBO Study – allowing existing policies to remain in place could lead economy back into recession, with economy contracting 1.3% during first half of 2013.
- Payroll tax cut, which lowered rate from 6.2% to 4.2%, virtually certain to expire.
- Sequestration share for 2013 is $109 billion, with non-defense programs cut by 8%.
- Programs financed by trust funds (e.g., the Highway Trust Fund) won’t be cut.
• Impact of November 2012 Presidential Election
- Obama re-election – continued emphasis on infrastructure - Romney election – easing of regulatory restraints, focus on energy projects
. 15
Note: For fiscal year 2012, if TX and AK excluded, then year-end balance is 3.8%.
For fiscal 2012, 12 states enacted budgetswith balance levels below 1%, while 19 statesenacted budgets with balance levelsbetween 1% and 5%.
Adequate fiscal cushion for a state is when year-end balance is at least 5%.
• Many states have faced large budget shortfalls, including the following states with the gaps closed when fiscal year 2012 budgets were adopted:
– California ($23 billion)
– Illinois ($5 billion)
– New Jersey ($10 billion)
– New York ($10 billion)
– Florida ($4 billion)
Source: Center on Budget and Policy Priorities
• Significantly – State Fiscal Stabilization Fund support under ARRA has diminished substantially –
2010: $61 billion
2011: $52 billion
2012: $ 5 billion
2013: $ 0.5 billion
U.S. Macroeconomic Outlook State and local finances improving, but budgets remain tight.
State & Local Governments
0
2
4
6
8
10
12
90 92 94 96 98 00 02 04 06 08 10 12 14
Year-end Balance, Percent of Expenditures
16
U.S. Residential – Single Family HousingAfter stalling in 2011, construction has picked up 2012.
Single Family Housing Thousands of Dwelling Units
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Single family starts in 2010 were helped by greater demand from homebuyer tax credits, now expired.
• Level of construction in 2011 fell below recession low of 2009. From 2005 peak to
2011, a decline of 75%.
• Only limited success for various programs to have at risk” homeowners rework their mortgages.
• Home foreclosures beginning to ease.
• Housing developers still limited by tight credit.
549
435 446 413510
615
-41% -21% +2% -7% +24% +21%
2008 2009 2010 2011 2012 2013
17
U.S. Residential – Single Family HousingSigns of improving single family market – rising home sales, stabilizing prices.
S&P Case-Shiller Home Price Index 20-Metro Composite, Indexed Jan 2000=100
100
120
140
160
180
200
220
01 02 03 04 05 06 07 08 09 10 11 12 13
• Demand for single family homes has begun
to improve, relative to end of 2010 –
Existing home sales up 11% New home sales up 14%
.
Home Sales - New & Existing Homes Millions
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
01 02 03 04 05 06 07 08 09 10 11 12
3.0
3.6
4.3
4.9
5.6
6.2
6.9
7.5
New Homes (L)
Existing Homes (R)
• S&P Case Shiller Index up for three months
in a row through July 2012.
Year-over-year gain for 20 Metro composite
in July is +1.2%, including:
Phoenix, +16.6% Minneapolis, +6.4%;
Detroit, +6.2%; Denver, up 5.4%.
But, Atlanta, -9.9%; New York, -2.6%;
Las Vegas, -1.0%; Chicago, -0.9%.
. 18
U.S. Residential – Single Family HousingSigns of improving single family market.
Supply of Single Family Homes Number of Months, New Homes
0
2
4
6
8
10
12
14
90 92 94 96 98 00 02 04 06 08 10 12
Mortgage Rates - Weekly Percent
3
4
5
6
7
8
9
10
11
90 92 94 96 98 00 02 04 06 08 10 12
Inventory of new homes for sale was
4.5 months in July and Aug., lowest since 2005.
• Record low mortgage rates – 3.4%, and will stay low through 2013.
• Demographic demand: 1 to 1.2 million units per year. Will it be helped by by echo boom moving into their 20’s?
19
U.S. Residential – Multifamily HousingMultifamily has led housing recovery; more growth in 2013.
304
136156
210250
285
-32% -55% +15% +34% +19% +14%
2008 2009 2010 2011 2012 2013
Multifamily Housing Thousands of Dwelling Units
0
100
200
300
400
500
600
88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Apartments led early upturn.
• Some benefit from stimulus act -- Affordable housing projects received a boost.
• Helped by push for downtown redevelopment.
• Demographics supportive, from both empty-nesters and now young adults. • Rental vacancy rates retreating, rents are increasing.
• Condominium projects now picking up.
• Compared to commercial building, still a relatively attractive investment target given more stable revenue.
.
20
21
Value$ Millions
DwellingUnits Project Description City State
Start DateYR: Month
231.0 893 Brickell CitiCentre – Condo/Apartment portion Miami FL 2012:09
200.0 359 398 Park Avenue South – Apartment portion New York NY 2012:04
200.0 65 Baccarat Luxury Hotel & Condominium New York NY 2012:05
200.0 510 1 North 4th Place Brooklyn NY 2012:08
184.4 378 Apartment Bldg. Brooklyn NY 2012:03
150.0 585 East Coast Tower V Long Island City NY 2012:08
146.6 589 Estuary-Lincoln Harbor Residential Complex Weehawken NJ 2012:06
144.3 535 Blvd 6200 Phase 1 – Apartment portion Hollywood CA 2012:06
140.0 97 The Watershed Condominium Apartment Building New York NY 2012:04
131.9 142 Oceana Key Biscayne Luxury Condos-Villas Key Biscayne FL 2012:08
126.6 240 120 Kingston Residential Boston MA 2012:08
119.0 299 One Rincon Hill Condo – Tower Two San Francisco CA 2012:09
U.S. Residential – Multifamily HousingRecent Large Projects
21
U.S. Residential – Multifamily HousingTop 10 Metros – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
+38%
+336%
+66%
+26%
+19%
+29%
+13%
+135%
-12%
+37%
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Houston
Austin
San Francisco
Seattle
Dallas-Ft. Worth
Boston
Los Angeles
Miami
Washington DC
New York
Billions of Dollars
2011 2012
22
U.S. Residential – Multifamily HousingTop Owners, based on BuildShare database
Miami FL metro area – Top 10 Owners/DevelopersJan. 2008- Sept. 2012
Millions of Dollars
$0 $50 $100 $150 $200 $250
Swire Properties Inc.
Wood Partners
The Related Companies of Florida
ZOM Development
Consultatio Key Biscayne, LLC
Alliance Residential Company
Trump Group
The Carlisle Group
Golden Beach Developers
C C Devco Homes
23
U.S. Commercial Buildings – StoresAfter steep decline in 2008-2010, store construction is turning the corner.
24
• Derived demand from housing market – definitely true on the downside of the cycle; now beginning to show on upside.
• Recent retail sales have fluctuated. Higher gas prices a negative for consumer spending in near term.
• Some outlet mall projects starting, along with projects by a few major retailers.
• Extreme discounters (Family Dollar, Dollar General) still expanding.
• Store renovations have seen much smaller decline.
208
9681 84
96113
-33% -54% -16% +3% +15% +18%
2008 2009 2010 2011 2012 2013
Stores & Shopping Centers Millions of Square Feet
0
50
100
150
200
250
300
350
400
88 90 92 94 96 98 00 02 04 06 08 10 12 14
24
25
Value$ Millions
Sq. Ft.(000s) Project Description City State
Start DateYR: Month
400.0 0 Macy’s Herald Square Renovation New York NY 2012:04
300.0 326 Linq Observation Restaurant & Entertainment Venue Las Vegas NV 2012:02
250.0 0 Winter Garden (Renovation) New York NY 2012:04
90.5 520 Brickell CitiCentre – shopping center portion Miami FL 2012:09
70.0 250 Tivoli Village at Queensridge Phase 2 Las Vegas NV 2012:07
60.0 430 Shops at Dakota Crossing Washington DC 2012:02
55.0 0 North County Mall (renovate/modernize) Escondido CA 2012:04
52.2 700 Fashion Outlets of Chicago Rosemont IL 2012:06
50.0 300 Market Street at Lynnfield Retail Stores (Shells) Lynnfield MA 2012:08
49.4 615 The Fountains at Farah Retail Shell El Paso TX 2012:07
40.0 37 The Fashion Mall (Expansion) Indianapolis IN 2012:03
40.0 350 Nanuet Mall (Renovation) Nanuet NY 2012:03
U.S. Commercial Buildings – StoresRecent Large Projects
25
26
U.S. Commercial Buildings – StoresConstruction by Major Retail Chains
Projects Started January-September 2012 Millions of Dollars for Projects Valued at $1 million+
0 200 400 600 800 1,000 1,200 1,400
Fred Meyer
Academy Sports
Kohls
CVS
Costco
Kroger
Target
Menards
Macy's
Wal-Mart
26
U.S. Commercial Buildings – WarehousesWarehouse construction seeing healthy percentage growth in 2011-2012.
27
193
6749
6286 95
-24% -65% -28% +28% +38% +10%
2008 2009 2010 2011 2012 2013
Warehouses Millions of Square Feet
0
50
100
150
200
250
300
350
88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Vacancy rates still high, but easing. Reached 14.5% in 2010 Q2, and have retreated to 13.1% in 2012 Q3.
• Some larger regional facilities still being built by major retailers. In 2011 and 2012, several large facilities built for Amazon.com.
• Continued need for updated facilities to handle improved inventory management practices. • Increased trade would help lift demand for warehouse space Imports/exports likely to be dampened in near term, due to global economic slowdown.
27
U.S. Commercial Buildings – HotelsHotel construction up 54% in 2011; more growth underway.
77
28
1727
33 37
-9% -64% -38% +54% +23% +12%
2008 2009 2010 2011 2012 2013
Hotels Millions of Square Feet
0
20
40
60
80
100
120
88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Negatives in 2009-2010: Sluggish economy, Reduced business travel hotel/casino overbuilding
• More positives now: Business travel has improved Industry financials stronger
Occupancies for 2012 YTD at 63.0% Revpar for 2012 YTD up 7.3%.
Revenue Per Available RoomSmith Travel Research
5.7%
-1.9%
5.5%
-16.9%
8.2%7.3%
-20%
-15%
-10%
-5%
0%
5%
10%
2007 2008 2009 2010 2011 2012 YTD
28
29
Value$ Millions
Sq. Ft.(000s) Project Description City State
Start DateYR: Month
180.0 580 Four Seasons Luxury Resort Lk. Buena Vista FL 2012:01
120.0 373 Los Angeles Marriott Hotel Complex Los Angeles CA 2012:04
100.0 120 Baccarat Luxury Hotel & Condo – hotel portion New York NY 2012:05
87.0 300 Hyatt Regency McCormick Place (Expansion) Chicago IL 2012:01
68.4 117 The Seville Beach Hotel/Condominiums Addition Miami Beach FL 2012:09
66.7 270 Margaritaville Casino Resort/Hotel Bossier City LA 2012:03
62.4 0 Westin Hotel (Renovation) New York NY 2012:02
52.5 240 The Grand Beach Hotel Surfside Surfside FL 2012:03
50.0 300 Mohegan Sun at Pocono Downs Hotel Wilkes Barre PA 2012:07
50.0 150 Potawatomi Hotel Milwaukee WI 2012:08
47.0 200 Brickell CitiCentre – hotel portion Miami FL 2012:09
45.0 0 Westin Peachtree Plaza (Renovations) Atlanta GA 2012:09
U.S. Commercial Buildings – HotelsRecent Large Projects
29
U.S. Commercial Buildings – Office BuildingsConstruction has stabilized, but renewed expansion has yet to begin.
159
7357 60 59 64
-27% -54% -22% +6% -2% +8%
2008 2009 2010 2011 2012 2013
Office Buildings Millions of Square Feet
0
50
100
150
200
250
300
350
400
88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Tight credit conditions caused more projects to be deferred in 2008-2009. Volume of deferred projects now easing.
• Market fundamentals – vacancies peaked in 2010, now retreating.
• Much of recent activity: Government office buildings Data Centers Corporate buildings, including headquarters.
• Corporate earnings have been strong – will that translate into more corporate headquarters?
• A few signs that speculative development is slowly stirring.
30
31
Value$ Millions
Sq. Ft.(000s) Project Description City State
Start DateYR: Month
200.0 215 Clifton Cloud Connection Center Clifton NJ 2012:05
200.0 1,000 A T & T Data Center Kings Mountain NC 2012:06
120.0 100 680 Folsom St/Hawthorne St Office Bldg. (Add/Ren.) San Francisco CA 2012:03
120.0 340 Panasonic Corporate Headquarters Newark NJ 2012:05
112.5 319 Biogen Idec New Office & Existing Office Alterations Cambridge MA 2012:01
105.9 538 Soc. Sec. Admin. Metro West Lease Facility – Ph 1 Baltimore MD 2012:02
101.3 0 AJ Celebrezze Federal Building Façade Re-cladding Cleveland OH 2012:03
101.0 598 UHG Office Buildings and Parking Garage (Ph 1) Eden Prairie MN 2012:07
99.4 469 Hyundai Motor Co. Headquarters Expansion Fountain Valley CA 2012:05
92.4 0 Data Center Ashburn VA 2012:05
84.7 110 Microsoft Data Center (Phase 2) W. Des Moines IA 2012:01
74.5 0 U.S. Dept. of Commerce Bldg. Renovations – Ph 2 & 3 Washington DC 2012:02
U.S. Commercial Buildings – Office Bldgs.Recent Large Projects
31
U.S. Commercial Buildings – Office BuildingsTop 10 Metros – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
+274%
-30%
+23%
+337%
+3%
+79%
-27%
+10%
+20%
-16%
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0
Los Angeles
Minneapolis
San Francisco
Kansas City MO
Chicago
Dallas-Ft. Worth
Boston
Houston
Washington DC
NewYork
Billions of Dollars
2011 2012
32
U.S. Commercial Buildings – Office BuildingsOffice market fundamentals are improving.
U.S. Office Vacancy Rates CB Richard Ellis
0
5
10
15
20
25
88 90 92 94 96 98 00 02 04 06 08 10 12 14
Downtown
Suburban17.3%
12.4%
Change in Office Employment Thousands of Workers
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Most of the cuts in office employment have already taken place.
• Office vacancy rates have topped off, now retreating gradually.
• Overbuilding is less than in past cycles.
33
U.S. Institutional – Educational BuildingsEducational buildings continue to lose momentum.
224
174148
132107 101
+2% -22% -15% -11% -18% -6%
2008 2009 2010 2011 2012 2013
Educational Buildings Millions of Square Feet
0
50
100
150
200
250
300
350
88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Numerous states during 2005-2008 passed large school construction bond measures, especially California and Texas. Money now spent.
• Major universities re-evaluated capital spending plans in 2008-2009 due to shrinking endowments; now re-visiting those plans.
Based on Sq. Ft. 2011 2012 YTD
Primary, Jr. Highs -15% -12%
High Schools -10% -24%
Colleges & Universities -6% -14%
Libraries -9% -40%
Laboratories -9% -50%
Museums +9% -34%
Community Colleges -1% -33%
Vocational Schools -16% -31%
34
35
Value$ Millions
Sq. Ft.(000s) Project Description City State
Start DateYR: Month
290.0 330 National Museum of African American History Washington DC 2012:05
166.0 277 William Eckhardt Research Center – Univ. of Chicago Chicago IL 2012:06
136.0 400 San Marcos High School Rebuild San Marcos CA 2012:04
131.8 180 Miami’s Frost Museum of Science Miami FL 2012:04
110.0 250 Science, Educ. & Research Center – Temple University Philadelphia PA 2012:09
105.3 0 Bartlett Hall Science Building – Phase 2 – West Point West Point NY 2012:03
105.0 339 Duxbury High School & Middle School Duxbury MA 2012:09
102.0 176 Maryland Public Health Laboratory Baltimore MD 2012:01
101.0 337 Essex & North Shore Agricultural Technical School Danvers MA 2012:06
100.0 129 Andlinger Ctr. For Energy & Environ – Princeton Univ. Princeton NJ 2012:05
100.0 120 The Broad Collection – Art Museum Los Angeles CA 2012:05
100.0 560 Lake Central High School (Addition/Renovation) Saint John IN 2012:08
U.S. Institutional – Educational BuildingsRecent Large Projects
35
U.S. Institutional – Educational BuildingsTop 10 States – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
-9%
-21%
-38%
+37%
-5%
-22%
+8%
+2%
-36%
-34%
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Florida
Ohio
Maryland
Georgia
Pennsylvania
Massachusetts
Illinois
New York
California
Texas
Billions of Dollars
2011 2012
36
U.S. Institutional – Educational BuildingsTop Owners, based on BuildShare database
State of Illinois – Top 10 Private Colleges/ UniversitiesJan. 2008- Sept. 2012.
$0 $20 $40 $60 $80 $100 $120 $140
University of Chicago
Northwestern University
Roosevelt University
Monmouth College
Loyola University
Illinois Wesleyan University
Bradley University
Midwestern University
Chicago Theological Seminary
Wheaton College
Millions of Dollars
37
U.S. Institutional – Educational BuildingsK-12 school construction larger and more volatile than colleges/universities.
In 2011, sq. ft. for K-12 school construction was 3.3 times the size of Colleges/Univ./Comm. Colleges.
Educational Buildings - Segments Millions of Sq. Ft.
0
25
50
75
100
125
150
175
200
88 90 92 94 96 98 00 02 04 06 08 10 12 14
K-12 Schools
Colleges/Universities,
Community Colleges
Educational Buildings - Segments Billions of Dollars
0
5
10
15
20
25
30
35
40
88 90 92 94 96 98 00 02 04 06 08 10 12 14
K-12 Schools
Colleges/Universities,
Community Colleges
In 2011, dollars for K-12 school construction was 2.1 times the size of Colleges/Univ./Comm. Colleges.
38
U.S. Institutional – Healthcare FacilitiesHealthcare facilities fell sharply in 2012.
Healthcare Facilities Millions of Square Feet
0
10
20
30
40
50
60
70
80
90
88 90 92 94 96 98 00 02 04 06 08 10 12 14
Hospitals
Clinics
• Hospital chains hard-hit in 2009 by tight credit conditions.
• Debate over healthcare reform created near-term uncertainty.
• Sector still supported by – Ongoing need to replace aging facilities Growth of elderly population.
• U.S. military Veterans Admin. projects helped to ease some of the near-term slowdown.
• Now – renewed uncertainty over healthcare reform.
More healthcare mergers.
Based on Sq. Ft. 2011 2012 YTD
Clinics +12% -11%
Hospitals -8% -25%
109
68 73 7563 64
+5% -38% +8% +3% -16% +2%
2008 2009 2010 2011 2012 2013
39
40
U.S. Institutional – Healthcare FacilitiesRecent Large Projects
Value$ Millions
Sq. Ft.(000s) Project Description City State
Start DateYR: Month
583.3 800 Exempla St. Joseph Replacement Hospital Denver CO 2012:01
420.0 490 Jacobs Medical Ctr/USSD Medical Center La Jolla CA 2012:04
335.0 825 St. John’s Mercy Medical Center (Replacement) Joplin MO 2012:02
300.0 600 CHOP Ambulatory Care Center Philadelphia PA 2012:04
299.8 409 Riverside Methodists Hospital Tower Columbus OH 2012:06
233.8 757 Jennie Sealy Hospital (Replacement) Galveston TX 2012:04
199.2 705 Northwestern Memorial Medical Office Building Chicago IL 2012:05
180.0 256 Highland Hospital Acute Tower Oakland CA 2012:02
171.3 0 Goldwater North Memorial Hospital Redevelopment New York NY 2012:01
156.3 216 Fort Irwin Hospital (Replacement) Fort Irwin CA 2012:07
140.0 355 Community Memorial Hospital Ventura CA 2012:02
140.0 431 Memorial Hospital Expansion Phase 2 Chattanooga TN 2012:03
40
U.S. Institutional – Healthcare FacilitiesTop 10 States – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
-15%
+59%
+157%
+131%
-18%
-1%
+34%
+4%
-49%
-37%
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Florida
Pennsylvania
Tennessee
Missouri
Illinois
Ohio
Colorado
New York
Texas
California
Billions of Dollars
2011 2012
41
U.S. Institutional – Amusement & RecreationalAmusement-related project leveling off; modest gain in 2013.
59
4235 33 32 34
-9% -29% -17% -5% -3% +7%
2008 2009 2010 2011 2012 2013
Amusement & Rec. Buildings Millions of Square Feet
0
20
40
60
80
100
120
88 90 92 94 96 98 00 02 04 06 08 10 12 14 • This category is affected by both public and private financial support.
• The year 2010 included several large amusement renovation projects in NYC --
$850 million for Madison Sq. Garden, $400 million for the Javits Convention Center, $53 million for Carnegie Hall.
• Casino projects gaining some momentum.
Based on Sq. Ft. 2011 2012 YTD
Convention Centers -11% -32%
Sports Arenas -12% +12%
Theaters -19% +28%
Other (inc. theme parks) -2% +2%
42
43
Value$ Millions
Sq. Ft.(000s) Project Description City State
Start DateYR: Month
105.0 130 San Jose Convention Center Expansion/Renovation San Jose CA 2012:02
100.0 300 Sioux Falls Events Center (Addition) Sioux Falls SD 2012:07
80.0 196 Univ. of Alaska at Anchorage Seawolf Sports Arena Anchorage AK 2012:06
78.0 67 Gaillard Auditorium (Add/Renovation) Municipal Bldg Charleston SC 2012:08
70.0 226 Penn State University Pegula Ice Arena State College PA 2012:02
63.5 273 Wind Creek Casino Wetumpka AL 2012:08
63.0 0 Pepsi Coliseum (Renovation) (Indiana State Fair) Indianapolis IN 2012:09
50.0 65 Kennedy Space Center Visitor Complex Kennedy Sp. Ctr. FL 2012:02
45.0 69 Rec. Facilities Improve. Univ. of Colorado Boulder Boulder CO 2012:05
43.6 64 Brooklyn College Performing Arts Bldg. (Addition) Brooklyn NY 2012:08
41.2 125 Recreation Center Cal Poly Pomona Pomona CA 2012:06
38.0 30 Minnesota Orchestra Hall (Expansion) Minneapolis MN 2012:06
U.S. Institutional • Amusement & RecreationalRecent Large Projects
43
U.S. Institutional – Airport TerminalsAirport terminal work in sq. ft. down, dollars stronger, due to renovation work.
3.0
4.4
3.0
1.51.8 1.6
+34% +49 -33% -49% +20% -10%
2008 2009 2010 2011 2012 2013
2.7 2.6 2.62.4
1.8 1.8
47% -4% -0- -6% -25% -0-
2008 2009 2010 2011 2012 2013
Airport Terminals Millions of Square Feet
0
2
4
6
8
10
88 90 92 94 96 98 00 02 04 06 08 10 12 14
Airport Terminals Billions of Dollars
0.0
0.5
1.0
1.5
2.0
2.5
3.0
88 90 92 94 96 98 00 02 04 06 08 10 12 14
44
45
Value$ Millions
Sq. Ft.(000s) Project Description City State
Start DateYR: Month
200.0 145 JetBlue JFK International Arrivals Term. Expansion Jamaica NY 2012:08
160.0 0 Delta Airlines LaGuardia Hub (Renovations) Flushing NY 2012:05
115.0 30 Greenville Spartanburg Airport – Renov. Phase 1 Greer SC 2012:08
99.7 273 Wichita Mid-Continent Airport Air Capital Terminal 3 Wichita KS 2012:09
95.7 60 Main Terminal East West Baggage Basements Dulles VA 2012:07
77.5 216 Terminal B South Side (Replace) - Bush Intercontinental Houston TX 2012:02
64.3 0 SF International Terminal – Term. 3 Boarding Area F San Francisco CA 2012:08
43.9 60 BWI B-C Security Checkpoint and Connector Linthicum MD 2012:05
42.0 0 Raleigh-Durham Airport Terminal 1 (Reconfiguration) Rdu Airport NC 2012:06
28.5 144 Bombardier Learjet Expansion Wichita KS 2012:05
21.9 45 Charlotte Int’l - W.Terminal and Baggage Screening Charlotte NC 2012:09
20.0 0 Tampa Int’l – Main Terminal Modernization Tampa FL 2012:07
U.S. Institutional – Airport TerminalsRecent Large Projects
45
U.S. Manufacturing BuildingsPlant construction has weakened once again in 2012 – uncertainty, trade slowdown.
80
36
4653 52
56
-12% -55% +28% +14% -3% +6%
2008 2009 2010 2011 2012 2013
31.0
9.7 9.5
17.1
11.8 12.8
+50% -69% -3% +81 -31% +8%
2008 2009 2010 2011 2012 2013
Manufacturing Buildings Millions of Square Feet
0
50
100
150
200
250
88 90 92 94 96 98 00 02 04 06 08 10 12 14
Manufacturing Buildings Billions of Dollars
0
5
10
15
20
25
30
35
40
45
88 90 92 94 96 98 00 02 04 06 08 10 12 14
46
U.S. Public Works – Highways and BridgesHighways/bridges retreating through 2012; large projects will help in 2013.
52.9
57.2
59.4
56.3
50.652.3
-1% +8% 4% -5% -10% +3%
2008 2009 2010 2011 2012 2013
• Waning stimulus support, combined with tough state fiscal environment has dampened construction near term.
• Fiscal 2012 appropriations – federal highway funding cut 5% to $39 billion. Some additional funds provided for disaster relief reconstruction.
• MAP-21 (Moving Ahead for Progress in the 21st Century) will keep transportation funding
at current levels through 2014.
Contains mechanisms to “stretch” funding.
• Federal funding for highways and bridges will not be hit hard by budget sequestration,
since funding comes via Highway Trust Fund.
• Added lift in 2012 could come from large projects, including a portion of the $5 billion
Tappan Zee Bridge project in New York.
Highways and Bridges Billions of Dollars
0
10
20
30
40
50
60
70
88 90 92 94 96 98 00 02 04 06 08 10 12 14
47
48
Value$ Millions Project Description City State
Start DateYR: Month
261.0 Sellwood Bridge (Replacement) Portland OR 2012:07
212.4 TX/DOT: Widening – Grading Surfacing TX 2012:03
132.2 I-405 NE Sixth to I-5 widening/Express Toll Lane Seattle WA 2012:06
132.0 US-I (Roads/Bridges) Ft Lauderdale FL 2012:02
124.3 San Gabriel Trench Grade Separation Project CA 2012:09
106.2 PA/DOT: I-95 – Main Lane Replacement PA 2012:08
93.2 NY/DOT: Expressway Reconstruction Staten Island NY 2012:04
89.8 MA/DOT: Bridge Replacement Worcester MA 2012:05
89.5 CA/DOT: Replace Roadway Pavement Bakersfield CA 2012:04
89.3 CA/DOT: Pavement Rehab – Slab Replacement R. Cucamonga CA 2012:04
86.6 CA/DOT: Replace Pavement and Widen Median Castaic CA 2012:04
79.1 NY/DOT: I-678 Kew Gardens Interchange NY 2012:08
U.S. Public Works – Highways and BridgesRecent Large Projects
48
U.S. Public Works – Highways and BridgesTop 10 States – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
+12%
+3%
+15%
-16%
-19%
+29%
-16%
-1%
-41%
+27%
0.0 1.0 2.0 3.0 4.0 5.0 6.0
Minnesota
North Carolina
New Jersey
Pennsylvania
Ohio
New York
Florida
Illinois
Texas
California
Billions of Dollars
2011 2012
49
U.S. Public Works – Rail, Mass TransitHighways/bridges retreating through 2012; large projects will help in 2013.
3.7
6.67.2
3.5
5.85.2
+3% +78% +8% -51% +65% -10%
2008 2009 2010 2011 2012 2013
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
88 90 92 94 96 98 00 02 04 06 08 10 12 14
Mass Transit - Rail, Rail Terminals, Rail Tunnels
Billions of Dollars
• Mass transit account has fared relatively well, raised 5% for fiscal year 2012.
• New York City area in recent years has
seen start of major projects, including:
- Second Avenue subway line - No. 7 subway line extension - $3.0 bil. Subway, Path Train Regional Hub - $148 mil. for phase 1 of Moynihan Station - $ 44 mil. renovation for Grand Central Station
• In 2012 – numerous rail projects – - $877 mil. RTD Eagle commuter rail in Denver CO
- $326 mil. Metro Gold Line in Pasadena CA
-$280 mil. Warm Springs St. Ext. in Fremont CA
• High-speed rail plans? Received zero federal
funding for fiscal 2012, but still has support of Obama Administration.
California high-speed rail project in progress.
50
U.S. Public Works – EnvironmentalEnvironmental public works adversely affected by tight budgets.
38.3 36.633.0 31.4
28.7 27.5
+2% -5% -10% -5% -9% -4%
2008 2009 2010 2011 2012 2013
• Projects generally take longer to reach construction start stage compared to transportation work.
• Construction often the result of EPA mandates to local governments.
• Budget sequestration will hit environmental projects harder than transportation work.
Sewers, Dams/Water Resources Billions of Dollars
0
2
4
6
8
10
12
14
16
18
88 90 92 94 96 98 00 02 04 06 08 10 12 14
Sewers
Dams, WaterResources
Water Supply Systems Billions of Dollars
0
2
4
6
8
10
12
14
88 90 92 94 96 98 00 02 04 06 08 10 12 14
51
U.S. Electric UtilitiesNew electric utility starts reaching record high; downturn likely in 2013.
• Energy Bills of 2005-2007 – provided tax incentives for electric utilities, transmission lines, etc.
• Stimulus act also provided boost – incentives for alternative sources of electricity generation.
• Capacity utilization was at 87% for 2007; utilization has since retreated to 74% for 2012 YTD, reflecting surge of new plants.
• Gas-fired plants strong in 2012, up 700% YTD.
• Vogtle and Summer nuclear plants (at $8.5 billion each) started in 2012. Prospects for
nuclear plants being re-evaluated, however.
• Alternative energy power plants very strong – 2010 up 124% and 2011 up 55% But 2012 YTD down 30%. Loan guarantees are expiring.
• Power lines also strong – 2010 up 53% and 2011 up 8%. But, 2012 YTD down 33%.
Electric Utilities Billions of Dollars
0
10
20
30
40
50
60
88 90 92 94 96 98 00 02 04 06 08 10 12 14
34
21
29
44
51
35
+79% -38% +36% +53% +17% -31%
2008 2009 2010 2011 2012 2013
52
53
Value$ Millions Project Description City State
Start DateYR: Month
8,500.0 Nuclear Power Plant Units 3 and 4 at Plant Vogtle Waynesboro GA 2012:03
8,500.0 Nuclear Power Plant Units 2 and 3 at V.C. Summer Plant Jenkinsville SC 2012:04
1,300.0 Riviera Beach Next Generation Clean Energy Center Riviera Beach FL 2012:02
1,100.0 Warren County Power Station Front Royal VA 2012:04
1,099.0 Ivanpah Solar Energy Complex (Plant 1 - 2 & 3) Ivanpah CA 2012:01
880.0 Los Vientos I & ll Wind Power Project TX 2012:02
803.0 Tehachapi Wind Farm – Phase 2 Tehachapi CA 2012:05
783.0 Flat Ridge Wind Farm Phase 2 KS 2012:03
750.0 Hereford Windfarm (400 MW) Hereford TX 2012:09
721.0 Entergy Ninemile Point Plant Generation Unit Expansion Westwego LA 2012:05
685.4 240 Mile Transmission Line Brookings MN 2012:05
535.0 Natural Gas-fired Combined- Cycle Unit Horseshoe Bay TX 2012:07
U.S. Electric UtilitiesRecent Large Projects
53
54
Billions of Dollars 2008 2009 2010 2011 2012 2013
Total Construction 558.6-13%
426.3-24%
433.7+2%
437.7+1%
457.9+5%
483.7+6%
Single Family Housing 122.4-39%
94.3-23%
100.0+6%
97.3-3%
123.5+27%
153.1+24%
Multifamily Housing 38.1-37%
17.9-53%
21.6+20%
28.6+32%
34.6+21%
40.3+16%
Commercial Bldgs. 81.4-19%
47.3-42%
41.8-12%
47.7+14%
50.1+5%
55.9+12%
Institutional Bldgs. 130.6+11%
112.3-14%
111.8-0-
99.5-11%
86.3-13%
86.6-0-
Manufacturing Bldgs. 31.0+50%
9.7-69%
9.5-3%
17.1+81%
11.8-31%
12.8+8%
Public Works 121.1-0-
123.6+2%
120.4-3%
103.8-14%
100.6-3%
100.0-1%
Electric Utilities 33.9+79%
21.1-38%
28.6+36%
43.7+53%
51.0+17%
35.0-31%
U.S. Construction Market Outlook
54
55
Risks to the Forecast Baseline Forecast Alternative Forecast
2012 2013 2012 2013
Total Construction +5% +6% +4% -7%
Single Family Housing +27% +24% +25% -2%
Multifamily Housing +21% +16% +20% -5%
Commercial Bldgs. +5% +12% +5% -6%
Institutional Bldgs. -13% -0- -13% -3%
Manufacturing Bldgs. -31% +8% -31% -5%
Public Works -3% -1% -3% -7%
Electric Utilities +17% -31% +17% -35%
55